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Evolutionary Behavioural Finance: A Model with Endogenous Asset Payoffs

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  • Igor V. Evstigneev
  • Mohammad Javad Vanaei

Abstract

The paper explores financial market dynamics from evolutionary and behavioural perspectives. Most of the studies on this topic deal with models in which asset payo¤s are exogenous and depend only on the underlying stochastic process of states of the world. The present work proposes a model in which the payoffs of assets are endogenous: they depend on the share of total market wealth invested in the asset.

Suggested Citation

  • Igor V. Evstigneev & Mohammad Javad Vanaei, 2022. "Evolutionary Behavioural Finance: A Model with Endogenous Asset Payoffs," Economics Discussion Paper Series 2202, Economics, The University of Manchester.
    • Handle: RePEc:man:sespap:2202
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    File URL: http://hummedia.manchester.ac.uk/schools/soss/economics/discussionpapers/EDP-2202.pdf
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    References listed on IDEAS

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    3. Rabah Amir & Igor V. Evstigneev & Thorsten Hens & Valeriya Potapova & Klaus R. Schenk-Hoppé, 2021. "Evolution in pecunia," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 118(26), pages 2016514118-, June.
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    7. Fuhito Kojima, 2006. "Stability and instability of the unbeatable strategy in dynamic processes," International Journal of Economic Theory, The International Society for Economic Theory, vol. 2(1), pages 41-53, March.
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